Exclusive: Green HVAC maker Gradient heats up with $18M
Gradient, a San Francisco-based HVAC maker, raised $18 million in Series A funding, the company exclusively tells Axios.
Why it matters: The Inflation Reduction Act has already started providing tailwinds to hardware startups that had previously struggled to win over investors.
Driving the news: Sustainable Future Ventures, a European climate fund, co-led the round along with existing investor Ajax Ventures. Sustainable Future Ventures' Matt Chagan join the company's board as part of the all-equity deal, Gradient CEO Vince Romanin says.
- Safar Partners, Climate Tech Circle, Shared Future Fund and At One Ventures also participated in the round, which closed in December.
Context: Heating and cooling accounts for a large portion of carbon emissions from buildings.
- And until the Inflation Reduction Act, there were few incentives for building owners to install efficient heating and cooling systems in older multifamily buildings.
- Romanin says the incentives have increased customer demand, particularly from building owners, and helped educate the public about heat pumps' role in emissions reduction.
How it works: Gradient designed a heat pump that can replace an in-window air conditioner with what Romanin calls a "saddle-bag" unit.
- It has two larger components that hang under a window instead of inside it, which he says helps make room for larger components necessary for efficient cooling while also keeping the window clear in small or old apartments that may only have one or two windows.
What they did: Gradient signed a purchase agreement with the New York City Housing Authority to provide up to 10,000 of its yet-to-be-developed lower cold-threshold units in public housing.
- The newer units will have a lower threshold for heating, meaning it can still heat spaces at lower temperatures than its currently available unit.
- "The people living in these buildings are not protected against effects of climate change and often bear the brunt of extreme weather events. It's really an opportunity for us to address mitigation and adaptation," Romanin says.